Environmental Due Diligence

Phase I ESAs / Phase II ESAs / State “Closure”

Phase I ESAs are conducted in accordance with ASTM E1527-21 and include a Tier 1 Vapor Encroachment Screening (VES) in accordance with ASTM E2600-15. Phase I ESAs and Tier I VES are required for HUD-FHA mortgage insurance programs as well as Fannie Mae and Freddie Mac financing.

When Phase I ESAs indicate Recognized Environmental Conditions (RECs), Phase II ESAs are typically conducted to further evaluate RECs. Phase II ESAs may include additional research as well as soil and groundwater investigations to characterize the nature and extent of contamination as well as potential exposure pathways. When vapor intrusion (VI) may be of concern for buildings, soil-gas and/or indoor air evaluations may be needed.

Lenders and investors frequently require state “closure” of open RECs as well as VI issues. Programs may be regulatory in nature or voluntary.

HUD Environmental Review

All HUD-assisted projects are required to undergo an Environmental Review (ER). The HUD ER must be completed using the HUD Environmental Review Online System (HEROS). The HUD ER ensures compliance with the National Environmental Policy Act (NEPA) as well as related laws and authorities at 24 CFR Part 50 and Part 58. The majority of HUD multifamily and residential health care projects required one of the following three levels review:

Categorically Exempt from NEPA Not Subject To Related Laws and Authorities (CENST): CENST projects may include only minor physical changes, such as 223(a)(7) or 232/223(a)(7) projects as well as certain 223(f) and 232/223(f) projects. CENST ERs require compliance with airport clear zones, coastal barrier resources and flood insurance. Radon testing is encouraged.

Categorically Exempt from NEPA Subject To Related Laws and Authorities (CEST): CEST projects include acquisition, repair, improvement, reconstruction, or rehabilitation, such as 223(f) projects as well as 221(d)(4), 220, 231 and 241(a) projects that are less than substantial rehabilitation. CEST ERs require compliance with airport clear zones, coastal barrier resources, flood insurance, air quality, coastal zone management, contamination and toxic substances, endangered species, explosives and flammable facilities, farmland protection, floodplain management, historic preservation, noise abatement and control, sole source aquifers, wetlands, wild & scenic rivers and environmental justice. Phase I ESAs are required. Lead-based paint, asbestos and radon testing is required as applicable.

Environmental Assessment (EA): EA projects are new construction and substantial rehabilitation, such as 221(d)(4), 220, 231 and 241(a) projects. EA ERs require compliance with CEST factors as well as the following NEPA considerations: land development, socioeconomic, community facilities and services and natural features. Phase I ESAs are required. Lead-based paint, asbestos and radon testing is required as applicable.

HUD ER Follow-on Studies

Vibration Studies: Existing and sited buildings that are closer than than 100 feet to a railroad track may require a vibration study and vibration mitigating measures. AZ-RI can manage these studies, which are performed by a registered professional engineer with experience in structural vibration analysis.

Noise: Day/Night Noise Calculations and Barrier Performance Calculations are completed as part of the HUD ER when required. AZ-RI can also manage site specific noise evaluations and noise abatement strategies.

8-Step Decision Making Process: If a project will impact the base floodplain, it must go through the 8-Step Decision Making Process to engage the public, evaluate alternatives, identify impacts and minimize harm. AZ-RI can assist with this process, when needed.

Historic Preservation: All HUD assisted projects must show that a Section 106 review was completed before approval is given to proceed with the project. AZ-RI performs these reviews as a part of the Environmental Review (ER) but also has 20 years of experience in historic preservation consulting, which includes the successful completion of state and federal historic rehabilitation tax credit projects as well as projects that required state historic easement alterations and stabilization programs.

Housing Requirements

Lead-based Paints: Properties constructed before 1978 typically require a lead-based paint inspection or risk assessment. Exceptions include senior housing and zero-bedroom dwellings assuming no children under 6 years of age reside at the property. Lead-based paint inspections are conducted in accordance with chapter 5 of the HUD Guidelines for the Evaluation and Control of Lead-based Paint Hazards in Housing. Risk assessments are conducted in accordance with Chapter 7 of the HUD Guidelines. Operation & Maintenance (O&M) plans may also be required when the potential for lead-based paint hazards exist.

Asbestos: Properties constructed before 1989 typically require a baseline or comprehensive asbestos survey in accordance with ASTM E2356. Removal of friable asbestos is usually required. O&M plans are typically required for non-friable and encapsulated asbestos containing materials.

Radon: Radon testing requirements are becoming more stringent. In most cases, financing will be contingent upon radon testing regardless of the EPA radon zone. When radon levels exceed 4 picocuries per liter (pCi/L), radon mitigation is usually required as well as operation, maintenance & monitoring (OM&M) plans. Radon testing is conducted in accordance with AARST MAMF-2017 (2021 revisions).

Mold: Certain financing vehicles require mold inspections and O&M plans.